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The traditional buy versus build trade‑off

Firms undecided between buying from a vendor or building bespoke software can look to Beacon, whose ‘buy-and-build on-top-of’ offering combines the best of both options, writes Alex Sayle, global head of platform engineering at Beacon Platform

Alex Sayle, Beacon

Institutions traditionally have two choices when they need software for their businesses: they can license a vendor product or invest in building the software themselves.

Most vendor systems are black boxes with application programming interfaces (APIs) to customise limited corners of the system – for example, to plug an in-house analytics library into existing derivatives product representations. Furthermore, most vendors do not provide source code to their clients, so the ‘buy’ decision is risky: if the vendor cannot deliver the required functionality out of the box or customise its product to the client’s requirements, the client will not get all the functionality they need. When clients inevitably bump into the edges of that black box and cannot extend the vendor platform in the ways required by their business, they end up building bespoke applications to fill the gap, often in spreadsheets.

Such solutions duplicate data and functionality from both the vendor system and other in-house applications. That approach may solve business problems in the short term, but it can be expensive and does not scale well over longer periods of time.

The ‘build’ choice is risky too. Running a large technology project is difficult, and many institutions find that projects often run dramatically over budget and over time. Finding a team of developers experienced enough to understand the business problem, design commercial requirements and execute enterprise-scale multiyear technology projects can be very challenging. Beacon’s platform helps its clients break the buy versus build stand-off by offering the best of both worlds.

Picking and choosing

Beacon describes this flexibility as ‘buy-and-build on-top-of’. To contrast with the usual ‘buy versus build’, institutions must normally deliberate when deciding whether to license a vendor product or invest in building in-house functionality. Beacon clients get the best aspects of both.

Unlike buyers of black-box vendor solutions, Beacon’s clients have access to the full suite of Beacon source code and can build their own components at any level in the stack. Client developer teams have a single shared codebase in which they build their tools and run their applications against the same code, and even run on the same hardware as the applications they license from Beacon. Having full access to the code and underlying platform means clients can buy the out-of-the-box Beacon functionality and then build their own in-house extensions. The result is a scalable platform that can be maintained for many years and avoids the problems associated with bespoke solutions such as spreadsheets.

Beacon offers clients cutting-edge trading and risk management functionality and analytics, as well as the underlying development platform. Clients have access to all of Beacon’s code to define out-of-the-box functionality, but code itself is not enough. Beacon’s client developer teams also have access to all of the data driving the calculations and the hardware that those analytics and applications run on. They can build their own applications, relying on the business logic already in Beacon, and run them on the same infrastructure Beacon uses in its own applications.

Clients have access to all the enterprise technology tools that Beacon’s own developers use: a consistent development environment that encourages collaboration, a dependency-aware batch scheduler for long-running jobs, a grid scheduler for parallel and elastic compute, and Beacon’s web application development framework and integrated systems development lifecycle – all hosted on clients’ own fully automated cloud infrastructures, facilitating deployment at scale.